Claim intermediaries should develop a code of practice to promote consumer confidence, as the actions of unethical operators tarnish the reputations of those providing services fairly, insurance industry compliance specialist Paul Muir says.

As a first step, an industry association would need to be formed, representing the interests of claimant intermediaries and dictating best practice standards and conduct, he says in an article posted on LinkedIn.

“Such a move is necessary, in my view, to promote consumer confidence in a growing area of providers to ensure a consistent standard of conduct against some practices that are questionable at best and bordering on a breach of AFS licence obligations,” he says.

Mr Muir recently sat on the three-member panel reviewing the General Insurance Code of Practice and has been an industry panel member for the Australian Financial Complaints Authority.

Intermediaries providing claims handling and settling services have been required to hold an Australian financial services licence since reforms took effect at the start of 2022. Obligations include acting efficiently, honestly and fairly, and adequately managing conflicts of interests.

Mr Muir says claim intermediaries could look at conduct, training and competence requirements in the insurer and broker codes as a base for producing a document aimed at services they provide.

“Claimant intermediaries can have a role to play assisting otherwise unrepresented insureds to navigate the complex claims process and ensure the insureds receive their full entitlements under an insurance policy,” he says. “However, the actions of an unethical few can tarnish the reputation and consumer confidence in those claimant intermediaries who provide their services in an ethical, professional, efficient, honest and fair manner.”

Conduct that may breach licence obligations could include recommending a cash settlement to an insured when that might not be in their best interests. Intermediaries should also charge clients a fee that is separate and distinct to any insurance funds, Mr Muir says.

The article is available here.